Cattle and beef markets have strengthened in October despite the uncertainty of the past couple of weeks. Feeder and fed cattle prices, along with boxed beef, have all advanced compared to pre-shutdown reports with fed cattle showing the strongest relative increase. By the end of this week many of the data holes may be filled in with a clearer picture of slaughter, carcass weights and beef production.
Last week, based on reported feeder prices at the Joplin Regional Stockyards, a 476-pound, medium/large frame steer could be purchased for $181.38 per hundredweight or $863.37/head. Or, a 567-pound steer was priced at $172.68/cwt or $979.10/head. Notice that the additional 91 pounds of beginning weight only cost $1.27 a pound, an important consideration as producers decide what weight to begin the stocker enterprise.
For dual-purpose wheat, winter stocker will be marketed in late February or early March, which allows for roughly 120 days of grazing and roughly 250 pounds of gain. That takes the 476-pound steer to 726 pounds, currently at $164.95/cwt or $1,197.54 per head.
The difference in value per head is a $334.17 gross margin or a value of gain of $1.34/pound. By comparison, the reported price for an 823-pound steer, which is 256 pounds of gain on the 567-pound beginning weight, is $159.75/cwt. or $1314.74/head. This results in a gross margin of $334.64/head or $1.31/pound.
There are many combinations of beginning weight and total gain for either dual-purpose winter stockers or graze-out steers marketed in May. In all cases the current value of gain is in the range of $.25-$1.35/pound of gain.
Perhaps most important, current feeder cattle futures prices for March and May would allow hedging with expected selling prices that are at or a bit higher than these current cash prices.
Regarding the purchase prices, we would typically expect to see seasonally low calf and stocker prices in the next month; however, I don’t expect to see much seasonal weakness given the current market situation. In fact, strong feedlot and stocker demand may result in limited counter-seasonal strength in feeder cattle prices into November. 
Derrell S. Peel is livestock marketing specialist for Oklahoma State University Extension. This originally appeared in the Cow/Calf Corner newsletter from the Oklahoma Cooperative Extension Service.
